The "contribution margin approach" to marketing cost analysis:
A) allocates all costs to products or customers.
B) should always be used instead of the full-cost approach-so that fixed costs are fully considered.
C) focuses management's attention on variable costs rather than total costs.
D) assumes that all costs must be allocated.
E) None of these are correct.

Question

Quizplus · Accepted Answer

The contribution margin approach focuses on variable costs rather than total costs, allowing management to better understand the impact of changes in sales volume on profitability. The approach does not allocate all costs to products or customers (A), nor does it always need to be used instead of the full-cost approach (B). It also does not assume that all costs must be allocated (D).

The "Contribution Margin Approach" to Marketing Cost Analysis